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Monetary Policy and the Fed
The Federal Reserve Board of Governors
by Chris Parry (Write for us!)
(Click on the links within the article to get definition of that word)
If you're serious about investing, and anyone who is investing
their funds in any market should be, then it's
important to understand precisely how the economy and governmentwork together. An important aspect of the United
States economy and government is the powerful Board of Governors of the FederalReserve. Here is a guide to
this body of individuals:
Congressset up the Federal Reserve Banks; they serve the government and consequentially help the national bankingsystem achieve its goals. Reserve Banks are very much like commercial banks, with the exception that the U.S.
government is its client - rather than an individual U.S. citizen. Also, the Federal Reserve has authority over
commercial banks.
Considering the importance of the Board of Governors in affecting monetarypolicy and
thus the general health
of the United State's economy and government, you might wonder who the Board of Governors actually are.
The President of the United States appoints the members of the Board of Governors and the Senate approves
these appointments, but who are these influential people?
There are seven members of the Board of Governors, and every two years, a new term begins. (The Chairman serves
in four year terms.) However, a member can stayon board for up to fourteen years! Dr. Ben S. Bernanke is the
current Chairman and he was sworn in February 2006. He came from the Federal Reserve's Federal Open Market
Committee, so he's certainly no stranger to formulating monetary policy. An investor should always take note
when a new member hops on the board as any changes in the Federal Reserve Board can have a significant impact
on the economy.
The Vice Chairman, as of July 2006, is Donald L. Kohn, who boasts published works on monetary policy and experience
with the Federal Reserve. It won't be until 2010 that the Board's leadership will change. Other members include
Susan Bies, Kevin Warsh, and Randall Kroszner. Both Warsh and Korszner are recent additions as
they were appointed
in 2006.
Hopefully this information can arm you with more confidence as you investigate the economy in which you might be eager to invest. If you want
to understand the health of the economy and government, it's important to understand how it's affected -
and the Federal Reserve plays a huge role.
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